WELCOME TO HARBOUR KEY'S JANUARY 2026 E-NEWSLETTER
HAPPY NEW YEAR
We hope you all had an enjoyable festive break.
Some individuals had a very enjoyable Christmas break! The number of Tax Returns filed on Christmas Day were 4,600, a slight increase from the previous year. 37,435 people completed their self-assessment tax return between Christmas Eve and Boxing Day, including the 4,606 filing on Christmas Day. Over New Year's Eve and Day, 54,053 people filed their returns. Nearly 5.65m people have yet to file their self-assessment tax return before the January 31 deadline, according to HMRC. In summary, approximately 45% of tax returns remain outstanding!
As Harbour Key enters one of its busiest months of the year with the 31 January filing deadline, together with other client compliance and advisory commitments as per previous years, we will deal with clients’ tax returns in order of receipt. This year is the highest number anyone can recall where we have not been provided with information at this late date. At this point we can’t guarantee meeting the filing deadline (31 January), where information has not yet been received. To help us prepare and file your tax return on time, please send in your information at the earliest opportunity, and when queries are sent out, again please deal with at the earliest opportunity. Please note sending your information in on a Monday, and asking where your tax return is, or what the tax payment is on Thursday will result in the standard reply- in the pipeline!
There is good news for some taxpayers, as the new high income child benefit charge PAYE digital service is now live meaning thousands of child benefit claimants who are only in self-assessment to pay the higher income child benefit charge, can now opt out and can choose to pay the charge back through their tax code. Eligible taxpayers can call HMRC to de-register from self-assessment before the filing deadline in a tax year. Where a tax return has already been sent, taxpayers can choose to de-register from the following tax year. HMRC will then amend your tax code, and you will be registered to pay the high income child benefit charge through PAYE.
BUSINESS PROPERTY RELIEF/AGRICULTURAL PROPERTY RELIEF
23 December 2025, 23 days after the Budget, the Government announced the threshold for Agricultural and Business Property Relief was to be increased, a nice Christmas present. As announced in the 2024 Autumn Budget, the plan was to introduce a £1 million cap on assets qualifying for 100% Business Property Relief or Agricultural Property Relief, with assets above this threshold being taxed at 20% from 6 April 2026. Following the announcement many have implemented or in the process of implementing mitigation planning; on 23 December 2025, it was announced that the allowance for the 100% relief will be set at £2.5m, rather than £1m. This means a couple will be able to pass on up to £5m of agricultural or business assets between them. It is not known when the decision was made to make the change, and whether it was known at the recent Budget date, and held off to mitigate the damage of releasing just before Christmas, however it did follow a week after a House of Commons grilling of the prime minister, on 17 December by MPs on the Liaison Committee, where he was questioned about the impact of the Agricultural Property Relief changes on farmers, who were feeling pressured to ‘expedite their own deaths’.
The announcement follows the first change announced in the recent Budget, the Chancellor Rachel Reeves announcing that spouses and civil partners will be able to transfer unused allowances. Any unused £2.5m allowance for the 100% rate of Agriculture and Business Property Relief will be transferable between spouses and civil partners, including if the first death was before 6 April 2026.
Our article regarding the original announcement can be found HERE.
Now to be read replacing the £1m with £2.5m.
POST BUDGET TAX PLANNING
Having had time to reflect on the November Budget, we have identified some simple tax planning/mitigation actions that can be undertaken. If you have somehow managed to avoid what was announced in the Budget, you can find our summary to our Budget article HERE, but top line, The Chancellor announced £26bn of tax rises, impacting workers, savers and investors.
Although (as above) there has been the very recent U-turn in respect of Agriculture and Business Property Relief, it is highly unlikely that a number of announcements in the recent Budget will change. Therefore, where possible, making smart moves before some of the changes come into effect, while also getting the most out of the tax breaks that remain, will put you on a good financial footing.
MAKING TAX DIGITAL (“MTD”)
We have been raising the need to prepare for MTD early for over the last eight years, and D Day is rapidly approaching- 1st April 2026. MTD is an HMRC initiative aimed at modernising the UK tax system by moving towards fully digital record keeping and tax submission. 2026 (the current tax year) will be the last normal year of filing self-assessment tax returns for those sole traders and landlords with a turnover above £50,000, as they will have to complete quarterly reporting to HMRC under MTD for Income Tax from 6 April 2026. Although HMRC is expected to notify individuals who are required to register, registration is not automatic and action will still be required to comply. A recent survey by IPSE found that nearly 40% of the 864,000 self-assessment taxpayers who will need to make the transition to MTD are unaware of the change. This change, mandates the use of HMRC-approved software and non-compliance could lead to fines of up to £3,000 per quarter.
THE KEY DATES FOR MTD CAN BE FOUND HERE
COMPANIES HOUSE - MANDATORY IDENTITY VERIFICATION FOR DIRECTORS AND PERSONS WITH SIGNIFICANT CONTROL (PSC's).
We have noted that a number of client directors have not completed their ID verification with Companies House which, if not completed, will result in penalties and not being able to file documents, resulting in the company being struck off. If you have not completed the Companies House ID verification, then please do so at the earliest opportunity and provide us with your code. If the verification is not completed you will be fined, and you will not be able file documents with Companies House eventually resulting in the Company being struck off. Please click HEREfor how important this is and what you need to do.
DATES
- Key Tax dates for the 2026 calender year.
- 31 January 2026 - Self Assessment deadline!
Should you wish to speak with us about a specific matter, or just to be a sounding board or for a chat, please do not hesitate to give us a call on 01452 713277
